ADNH reports lower 2008 profit - Emirates24|7

ADNH reports lower 2008 profit

The Abu Dhabi National Hotels (ADNH), one of the largest hotel operators in the Middle East, said yesterday its net profit declined due to lower investment income caused by the global financial crisis.

The company said it discussed financial results during the first 11 months of 2008 at a board meeting on Wednesday and listened to a report on restructuring plans and a long-term company strategy until 2014.

"During the meeting, the financial manager presented a report on the company's performance during January-November last year and the good results from the hotel sector," ADNH said in a statement at Abu Dhabi Securities Exchange.

"The manager confirmed the negative effects of the global financial crisis on the company's local and foreign investment portfolios… this has led to a decline in the company's net profits during that period compared with 2007."

The statement followed a detailed report issued by the Kuwaiti financial centre Markaz, which expected a drop in ADNH's net earnings in 2008 following a 78 per cent plunge in its profits in the third quarter and a decline of around 11 per cent in the first nine months of the past year.

"The volatility in investments and other income has resulted in ADNH's net income showing inconsistent growth. This volatility can be attributed to gains on investments carried at fair value through income statement," Markaz said.

"We expect ADNH's 2008 net income to decline by 18 per cent on the back of losses from investments and other income. For 2009, we expect the company's net income to decline by a further eight per cent on the back of lower revenue from the hotels business expected due to the global slowdown."

Citing ADNH balance sheet, it said the company's net profits dived by 78 per cent to $4m (Dh14.68m) in the third quarter of 2008 compared with the same period of 2007. But its operating revenue surged by 35 per cent to $105m, while the net income fell by 11 per cent to $79m in the first nine months.

The report said the contribution of the hotels segment has grown steadily for ADNH since 2003, with its revenues rising by around 15 per cent annually.

"The decline in net income in the third quarter of last year was attributable to losses from investments and other income amounting to $14m compared to gains of nearly $3m in the same period of 2007," Markaz said.

"However, the company's gross profit increased 18 per cent to $27m in the third quarter on the back of a 35 per cent rise in operating revenue to around $105m. For the first three quarters, ADNH's net income declined by 11 to $79m owing to losses from investments and other income."

According to Markaz, while ADNH's gross profit has grown consistently since 2003, the investments and other income have been highly volatile.

 

Comments

Comments